Electricity price forecast to be stable

Photo/File

If you're paying more than 28.5 cents per kilowatt hour (kWh) for power, you're paying more than the average Wanganui resident.

The Ministry of Business, Innovation and Employment's latest quarterly survey of domestic electricity prices found the average Wanganui household paid 28.5c kWh for its power.

This is up from last year's average of 27.6c kWh and more than 5 cents higher than five years ago.

Going back 10 years, the average electricity cost in Wanganui was just 18.6c kWh - but the good news is that prices should be fairly stable over the next few years.

Electricity Authority chief executive Carl Hansen said higher transmission and distribution charges had accounted for 72 per cent of power price increases in the past three years.

"The higher transmission charges reflect substantial investment in upgrading the national transmission grid and the higher distribution charges reflect the Commerce Commission's view that most distributors were earning too low a return on capital," he said.

"The competitive part of the sector, essentially covering generation and retailing activity, accounted for 28 per cent of the rise in retail prices over the past three years."

From 2004 to 2011, it was a different story, with 69 per cent of power price increases due to competition in the retail power market.

"A key driver of these increases were very sharp price rises for gas and coal - for example, a 95 per cent increase in gas prices over the 2001-08 period," Mr Hansen said.

The Electricity Authority believed prices would be relatively flat over the next few years, he added.

It would be difficult to know if the Auckland power crisis would affect regional prices until the after a review which the authority would send to Energy and Resources Minister Simon Bridges by the end of April.

Trustpower community relations manager Graeme Purches said previous government-driven power upgrades had increased line and transmission charges.

He said in the last few months of its last term, the Labour Government signed off Transpower investing significantly in much needed upgrades to the National Grid.

"Previously, the Labour Government had required maximum dividends from Transpower, having no money for these upgrades," Mr Purches said.

"As a consequence, the belated planning and all of the upgrade work authorised by the Labour government had occurred and had needed to be paid for under the watch of the current National government."

Most retailers had reduced their margins because of competition, and households had become more energy efficient.

"It doesn't look like there'll be big price increases in the next couple of years," he said. "It will probably plateau."

Mr Purches believed the Auckland power crisis would not affect regional prices.

Consumers could keep their power bills down by using energy efficient lightbulbs and appliances, and insulating and ventilating their homes, he added.

Households can check out whether they are on the best electricity price plan on www.whatsmynumber.org.nz, while businesses can use www.switchme.co.nz